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Malta has recently earned the name “Blockchain Island”, claiming to be the first jurisdiction in the world to adopt blockchain regulations - three in fact. And, the Mediterranean island has already attracted the two largest crypto exchanges, Binance and OKEx, and most recently ZBX, now opening offices in the rising crypto hub.

In July this year that the Maltese Parliament passed law setting the framework blockchain (distributed ledger technology (DLT), cryptocurrency and digital assets.

And, the following month, Silvio Schembri, Malta’s Junior Minister for Financial Services, Digital Economy and Innovation (responsible for implementing Malta’s Blockchain Strategy, was quoted on Forbes explaining how Malta has become the world’s blockchain island.

Clearly, the politicians here have big aspirations. This is after all one of the world’s smallest countries (122 per square miles/316 km2) as well as most densely populated (c.475,000).

Of course various countries would always want to claim that have first mover advantage, be the first to do X or Y in a certain industry space and vie for pre-eminence over other jurisdictions. It's a bit a akin to claims about which trading house has the fastest roundtrip trading execution capability.

For the record, back in December 2017 Gibraltar announced they would be launching the world’s first bespoke license for “fintech” firms using blockchain distributed ledger technology under the auspices of The Gibraltar Financial Services Commission (GFSC). At the time Reuters reported that move would happen during 2018 and was: “The first of its kind and would formally recognize the use of blockchain records as an accepted mechanism for transmitting payments, paving the way for broader adoption...”

The massive scale of the Malta Blockchain Summit, which takes place this coming week (November 1-2), reflects this new-found momentum. The summit, which has been in the planning since last December and will see banks and some big names in venture capital (VC) space attending, is set to take place at the InterContinental Hotel at St Julian’s on the island. The event consists of four conferences over the two days, namely:

A Regulatory conference;

A Marketing and Investment conference;

A Developer and Technology conference; and,

A Tokenomics and Crypto conference.

These proceedings are set around an already sold-out exhibition floor. Added to that there is a two-day Hackathon with around 300 blockchain developers taking part, with a €50,000 (c.$57,000) prize up for grabs to the winners.

Rounding things off, there is an Initial Coin Offering (ICO) pitch battle between what are described as thirty of the “hottest” start-ups in the crypto sphere. Each entity, who will be competing for $100,000, will have 10 minutes to make a pitch to a panel of judges.

It all comes on the heels of another blockbuster blockchain event on the island, the Delta Summit, which was convened at the start of October, which was attended by a little over 4,000 attendees from far and wide. But the Malta Blockchain Summit is on course to top that number according to the organizers.

Melanie Mohr, CEO and founder of WOM protocol, which is building a blockchain-based protocol that allows brands, content creators, publishers and social networks to monetize “word of mouth” (i.e. WOM) recommendations on any app or platform, chose Malta as a jurisdiction because the organization believes it is at the “forefront from a regulatory standpoint” in the blockchain and DLT space.

“A significant number of very knowledgeable people from the global blockchain community have worked diligently together with the government [here] to develop a legal framework, which regulates wisely and supports the further development of blockchain and DLT,” said the Berlin-based entrepreneur who is working at the forefront of the global digital revolution.

WOM indicated that they had also found a “great level of support” on the island.

Having founded video m-commerce platform YEAY in 2016 with the aim of providing GenZ with a bespoke space to share and shop, Mohr added: “The recent Delta Summit [October 3-5] showed how well Malta has positioned itself already. It delivered great content from top-notch speakers and attracted the global community to join. It was packed and for me THE blockchain event of the year to date.”

As such the German entrepreneur is “more than convinced” that the upcoming Malta Blockchain Summit will show that the island is “really in the spotlight of the global blockchain development” with thousands of attendees from around the world. “And, it can proudly call itself Blockchain Island,” she asserted.

Melanie Mohr, CEO and founder of WOM, at the Delta Summit, a blockchain and crypto event that took... [+] place in Malta from October 3-5, 2018. She is standing between Dr. Abdalla Kablan, a Malta Stock Exchange Director (on left), and Silvio Schembri (on right), Malta’s Junior Minister for Financial Services, Digital Economy and Innovation. (Source: WOM Protocol).

WOM Protocol.

Crypto Exchanges & Malta Exchange

In the case of Binance, the world’s largest cryptocurrency exchange by trading volume, a Memorandum of Understanding (MoU) was signed last month (September 11) with MSX Plc, the fintech and digital asset subsidiary of the Malta Stock Exchange.

This initiative was to launch a new digital exchange for security token trading, with the new trading platform poised to leverage Malta Stock Exchange’s 26-year track record of operating as a regulated stock exchange.

The MoU follows a decision by Binance to extend its business to Malta, in recognition of the country’s crypto regulatory climate. Changpeng “CZ” Zhao, CEO of Binance, commenting at the time said: “Malta has become a global hub for blockchain technology through active and transparent crypto regulations.” (Note: Zhao’s net worth was put at north of $1.1 billion by Forbes in February 2018).

And, when I visited the exchange in Valletta this July for a tour, one could see that space was being set aside for innovative fintech start-ups in incubator hubs in the building.

Apart from admission and trading, the exchange that resides in the Garrison Chapel looking out over the harbour offers a comprehensive range of back-office services.

This includes maintenance of share and bond registers, clearing and settlement and custody services via its Central Securities Depository (CSD), which is situated in-house. It also has a link with Clearstream Banking in Frankfurt (part of Deutsche Boerse), and in Luxembourg that facilitates international access.

As explained by Simon Zammit, CEO of the Malta Stock Exchange during my visit, the exchange announced in May 2107 that it was to continue its use of Deutsche Boerse trading technology, extending an agreement from 1 January 2017, for another five years from that point - until 31 December 2021.

They also extended the exchange’s trading hours from 9.00 a.m. to 3.30 p.m. Zammit pointed out of that time that Deutsche Boerse’s technology was “extremely reliable” and highly performant. The partnership has been in place since 2012.

The Malta Stock Exchange located in the building of Garrison Chapel, which is situated in Castille... [+] Place, one of the landmark locations in Valletta on the Mediterranean island, June 17, 2018. (Source: Getty, royalty free).

Boasting what the organizers claim are 5,000 delegates attending the huge event in a few days time, hundreds of investors, around 100 speakers and some 300 sponsors and exhibitors, the Malta Blockchain Summit will set the stage to announce the new crypto, ICO and blockchain regulations for Malta, as well as host debates surrounding the potential applications of blockchain across a myriad of industries such as entertainment, government, and banking.

Well, that is the tune being disseminated from the island in recent weeks by the organizers.

One delegate who I spoke to at CoinAgenda Europe (2018) on the island ventured in relation to the best - or perhaps the "right" - jurisdiction for crypto or blockchain businesses and regulation ventured: “Everyone decides to pick what they think is the right country. And, right now it clearly looks to be here [Malta]. We will see whether that lasts. I think it has a good chance of lasting here. But my motto is: Jurisdictional Diversification.”

Proactive Approach

It is the Maltese government’s forward-thinking approach to blockchain regulation, their low corporate-tax, being part of the European Union (EU)-zone and the warm climate that allures the vast number of various blockchain related companies to escape to Malta and the migration trend is incremental.

Indeed, when I was last in Malta this June for the CoinAgenda 2018 event during which Joseph Muscat, the Prime Minister of Malta, gave a Keynote address, you could be forgiven for thinking one was in paradise.

Siim Õunap, the COO for Celerexx, a new exchange launching in 2019, commenting on the jurisdictional landscape said: “The Maltese government has been seeking to get crypto-related companies to boost their economy for quite some time and they been successful in their approach.”

The Estonian added: “While their governmental services and legal procedures are behind e-countries such as Estonia or Lithuania, special regulations allow Celerexx to offer lower prices and better services to our customers, which makes [for us] the move to Malta worthwhile.”

It is not just the exchanges that choose a more contributing environment in Malta for their operations. Coinvest, the crypto investment trading firm, announced a new collaboration with the Maltese government to establish a blockchain council. In addition, the new regulatory framework also supports ICO companies in their financial products, attracting many new and innovative projects to set up their base camp on Blockchain Island.

Together these will provide what are being described as a “clear and navigable” framework for innovative technology businesses in a way that rules and governance are not the roadblocks to innovation. Blockchain and crypto pundits out there contends that the current indecisiveness and half-hearted regulation of most of the national regulatory bodies are just as inhibiting and near-sighted - as is the outright prohibition of innovative solutions.

The Malta Digital Innovation Authority Act establishes the governance body to regulate the Distributed Ledger Technology, or DLT, industry with its principal goals to ensure businesses accepted as Technology Service Providers and the services they provide are in accordance with the principle of being honest and transparent to protect the consumers and financial markets.

The Innovative Technological Arrangement and Service Act is created as the futureproof regime for the registration and certification of Technology Service Providers and Technology Arrangements as it envisages the possibility of unforeseen technology developments.

The Virtual Assets Act is a framework within there is Financial Instruments Test that provides clear indication whether cryptocurrency or token issued in an ICO would qualify as a financial instrument that needs to be regulated as a security or virtual token that falls outside of the scope of regulation.

If the asset cannot be classified as either, it will be considered as a Virtual Financial Asset and regulated by the new law once it has enforced. ICOs and crypto exchanges can now breathe easy knowing that they are in compliance with the authorities and do not have to worry about being shut down.

Prime Minister Joseph Muscat, who will inaugurate the regulatory conference, in giving a keynote speech on July 16 at the CoinAgenda Europe (2018) event at the Westin Hotel, St Julian, described the enactment of the three new laws as a “sweeping round” of legislation (i.e. covering the blockchain, crypto and digital asset space), saying: “This is not the end but just the start and the Maltese Government had to be innovative.”

One of the most keenly anticipated speakers at the conference is Dr W. Scott Stornetta who co-authored a paper that described for the first time a digital hierarchy system that utilized digital time-stamps for ordering transactions, the solution that entity called Satoshi Nakamoto later used in his Bitcoin protocol. This has earned Dr Stornetta the recognition as the founding father of blockchain technology.

The Winklevoss twins are attending as VIP investors and John McAfee, the famous British-American programmer and businessman, who I bumped into on a Blockchain cruise from Barcelona to Monte Carlo this September organized by Coinsbank, is now confirmed as a speaker for the developer’s conference of the summit.

In 1987, he founded McAfee Antivirus, and under his leadership the company executed a meteoric rise to the top of the computer security industry. If his keynote to delegates on the Royal Caribbean cruise ship is anything to go by delegates at the Malta Blockchain Summit are unlikely to feel short changed.

And not to be outdone by her human counterparts, Sophia, the Artificial Intelligence (AI) humanoid robot has been confirmed as a speaker at the upcoming Summit. The Saudi Arabian citizen will join her creator in a fireside chat during proceedings. It all brings back memories of IPsoft’s Amelia, a digital personal assistant, who I saw in action earlier this summer in New York’s financial district at Cipriani.

The Hanson Robotics’ creation has become something of a media darling, appearing on popular late-night talk shows, gracing magazine covers, and taking up sought-after seats on plum panels and high-level conferences. Her status as a cultural icon has allowed her to ignite advanced conversations on how robotics and artificial intelligence will permeate people’s lives.

The event has already attracted hordes of investors to witness an ICO battle that provides a highly valuable opportunity for thirty blockchain-based companies to get support for the next step in their roadmap.

One of those ICOs to pitch at the Malta Blockchain Summit is Zelectrix, a team of talented specialists that will change the way electric vehicles (EVs) and their own EV rental fleet are powered with improved chargers utilizing renewable energy and underpinned by the state-of-the-art Thought AI blockchain.

Raido Lensment, CEO of Zelectrix, commenting said: “As part of the service to our customers using our chargers and renewable energy grid, we are looking at creating financial products as part of Zelectrix payment scheme.”

He added: “Our research is showing that Malta may be the right choice for our company and the opportunity to pitch our project at the Malta Blockchain Summit is greatly anticipated by our team. We just hope the Winklevoss brothers will be listening.”

The Malta Blockchain Summit, is already on its way to becoming an annual landmark event in the global blockchain calendar. And, when I spoke to one of the organizers, Dennis Avorin, a Swedish national, at the start of October it was pretty certain that the event will see a repeat in 2019.

The organizers are also inviting “C-level” executives and investors from within the sphere to exclusive invite-only dinners throughout the year under the Maltese-themed title ‘Knights of Blockchain’.

Pulis amongst others said that we can “expect riveting discussion” about the world-changing potential applications of blockchain across multiple verticals. “But also, some good, old fashion networking under the sun of the Blockchain Island,” he added. And, given the scale of the event, if they had motto it would be that “Business is not made between companies - it is made between people.” Time will tell.

I am a freelance financial journalist based in London and former FT staff writer covering stock exchanges and transaction services. In recent years I have written for a…

I am a freelance financial journalist based in London and former FT staff writer covering stock exchanges and transaction services. In recent years I have written for a number of trade titles like Futures & Options World (FOW), magazines such as the FT’s Investors Chronicle and UK national newspapers like The Independent. Prior to this I worked as a ratings editor for Moody’s in London and New York, and subsequently became Fitch Ratings’ first comment writer across EMEA. My writing spans business topics across the trading lifecycle - front to back. During my career I have interviewed leading bankers, brokers and exchange officials in London, New York, Paris, Prague, Warsaw and Zurich. Presently I am also an Associate Analyst for BISS Research (www.bissresearch.com), the UK-based independent benchmarking firm. For my sins I support Arsenal FC and rugby club Saracens.